Correlation Between Vivaldi Merger and Franklin Templeton

Can any of the company-specific risk be diversified away by investing in both Vivaldi Merger and Franklin Templeton at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vivaldi Merger and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vivaldi Merger Arbitrage and Franklin Templeton Multi Asset, you can compare the effects of market volatilities on Vivaldi Merger and Franklin Templeton and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vivaldi Merger with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vivaldi Merger and Franklin Templeton.

Diversification Opportunities for Vivaldi Merger and Franklin Templeton

0.11

Correlation Coefficient

Vivaldi Merger  Franklin Templeton

Average diversification

The 3 months correlation between Vivaldi and Franklin is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vivaldi Merger Arbitrage and Franklin Templeton Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and Vivaldi Merger is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vivaldi Merger Arbitrage are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton has no effect on the direction of Vivaldi Merger i.e., Vivaldi Merger and Franklin Templeton go up and down completely randomly.

Pair Corralation between Vivaldi Merger and Franklin Templeton

Assuming the 90 days horizon Vivaldi Merger Arbitrage is expected to generate 0.26 times more return on investment than Franklin Templeton. However, Vivaldi Merger Arbitrage is 3.89 times less risky than Franklin Templeton. It trades about 0.43 of its potential returns per unit of risk. Franklin Templeton Multi Asset is currently generating about -0.01 per unit of risk. If you would invest  1,055  in Vivaldi Merger Arbitrage on December 29, 2024 and sell it today you would earn a total of  14.00  from holding Vivaldi Merger Arbitrage or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vivaldi Merger Arbitrage  vs.  Franklin Templeton Multi Asset

Vivaldi Merger Arbitrage

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vivaldi Merger Arbitrage are ranked lower than 33 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Vivaldi Merger is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Templeton

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Templeton Multi Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Templeton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vivaldi Merger and Franklin Templeton

The main advantage of trading using opposite Vivaldi Merger and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vivaldi Merger position performs unexpectedly, Franklin Templeton can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin Templeton will offset losses from the drop in Franklin Templeton's long position.

The idea behind Vivaldi Merger Arbitrage and Franklin Templeton Multi Asset pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..